"Merrill Lynch reiterated its forecast for U.S. online advertising spending this year. 'We continue to estimate a 29% increase in U.S. online spending this year to $12.4 billion,' Merrill said. The research firm expects a 21% compound annual growth rate through 2009, with spending reaching $25 billion. Merrill raised its estimates on Google, saying the new valuation makes the company 'more palatable, but not compelling.' The research firm raised the 2006 revenue estimate on Google to $5.2 billion from $5.1 billion, and increased the earnings growth rate for 2005 to 2009 to 22% from 18%. Elsewhere in the sector, Merrill said broadband access price cuts could accelerate broadband penetration."[Forbes.com]
Are all ad and ad related companies tracking well? Valueclick one of the recent high flying ad companies today announced acquisition of an ink and toner product online retailer, E-Babylon (in addition to its acquisition of Web Marketing Holdings for $141M). Read the story
here. Not sure why an ad company would want to get into the ink and toner business unless its own ad business was struggling for the 29% growth. Wall street seems to think there's value in the acquisition though, driving up VCLK's stock price 5% post announcement.
Check out VCLK's 1 year chart vs. GOOG:
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